Other policy matters Other policy matters Annual income tax rates for —14 tax year The annual income tax rates for the tax year are the rates set out in schedule 1 of the Income Tax Actand are the same that applied for the tax year. Application date The provision applies for the tax year. Background As a result of the Canterbury earthquakes, a number of changes to tax law were made in and These measures included deferring recognition of depreciation recovered in respect of certain assets rollover reliefand rules to smooth the timing of income recognition for insurance proceeds received for damaged assets.
In contrast, under US GAAP FAS 5, in particular there had long been a tradition of, at minimum, disclosure of guarantees, and in many circumstances the accrual of the anticipated loss to be suffered by the guarantor. Advertisement IFRS has been revised to provide guidance on the accounting for all financial guarantees—those which are in effect insurance, the accounting for which is therefore to be guided by the provisions of IFRS 4, and those which are not akin to insurance, and which are to be accounted for consistent with IAS 39, which has been amended appropriately.
For purposes of applying the new guidance, a financial guarantee contract is defined as a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due. These are generally to be accounted for under provisions of amended IAS 39, as follows: Financial guarantee contracts are initially recognized at fair value.
In subsequent periods, the guarantee is to be reported at the higher of: If certain criteria are met, the issuer guarantor may elect to use the fair value option set forth in IAS That is, the guarantee may be designated as simply being carried at fair value, with all changes being reported currently in profit or loss.
Rather, these credit derivatives as they are often known are to be accounted for at fair value under IAS These are derivative financial instruments, not insurance. The accounting for such derivatives is not affected by the amendments. The amended language of IAS 39 observes that financial guarantee contracts can have various legal forms e.
The basic requirement of these amendments is that financial guarantee contracts, as defined, are to be accounted for under IAS 39, not under IFRS 4. However, there is an important exception: This is an irrevocable election. Apart from this special optional treatment, all financial guarantees are to be accounted for as set forth above.
Both also imply a present value equivalent of future resource outflows, assuming that the timing of such outflows could be estimated. Typically, the guarantee is a sales inducement e. The guarantee liability is accounted for as set forth above adjusted to the higher of fair value or amortized original value, if amortization is proper under IAS Lie Dharma evaluates its risk of payment as follows: There is no possibility that Lie Dharma will pay to honor the guarantee during year 1 or, equivalently, there is zero risk of default by Putra in year 1.
The expected cash outflows from the guarantor are computed as follows: This would effectively reduce the net selling price of the equipment sold to Putra by a like amount, thereby reducing the profit to be reported on the sale transaction.
The guarantee liability would be amortized to income over the term of the three-year loan; if no default occurs, the dealer recovers the full sales expense it incurred by offering the discount.The depreciation method used should reflect the pattern in which the asset's economic benefits are consumed by the entity [IAS ]; a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate.
2 October Applying IFRS – New IASB leases standard – Mining and Metals Overview Mining and metals entities will need to change certain lease accounting.
International Financial Reporting Standards, usually called IFRS, are standards issued by the IFRS Foundation and the International Accounting Standards Board (IASB) to provide a common global language for business affairs so that company accounts are understandable and comparable across international boundaries.
They are a consequence of growing international shareholding and trade and . The present study examines the value relevance of disclosed related party transactions (RPTs) in group of companies at the Greek food-beverage sector.
Financial Accounting Manual for Federal Reserve Banks, January 1 Reserve Banks must consult with the RBOPS Accounting Policy and Operations Section to determine if capitalization is It should be noted that Table provides parameters within which the Reserve Bank may determine the appropriate depreciation schedule for assets.
The key to determining useful life is the creation of a procedures manual that details how depreciation elements are determined for each of the asset classes.